Homeownership keeps falling

NEW YORK » Homeownership in the U.S. dropped for a fourth consecutive quarter, the longest decline since at least 1981, suggesting more Americans will miss their best chance of building wealth.

The proportion of households that own their residences fell to 68.1 percent in the July-September period from 68.3 percent in the prior three months, according to a report yesterday from the Census Bureau in Washington, whose comparable records go back to 1981. The rate has been declining from a peak in 2004, which culminated a decade of gains fueled by easier lending standards and rising home purchases by immigrants and younger households.

"Owning a home in this country has been a principal source of wealth creation for low- and moderate-income people," said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies in Cambridge, Mass. "In the absence of home equity, families will inevitably spend less."

Homeowners accumulate wealth faster than renters, with median net wealth for owners at $184,400 in 2004, compared with only $4,000 for renters, according to Federal Reserve figures.

The ownership rate reached a record 69.3 percent of households in 2004, up from 64 percent a decade earlier. With home prices soaring, net household wealth nearly doubled to $51.8 trillion at the end of 2005 from $27.6 trillion in 1995, with real-estate accounting for 47 percent of the change, according to Federal Reserve data.

Declining ownership rates mean fewer Americans will be able to tap housing equity to fund education, vacations and other spending. In the last year, the proportion of American households that own their homes dropped by 0.8 percentage point, the biggest year-over-year decline since 1981-82.